Mumbai, March 13 Sensex on Friday recorded its highest single-day point gain (413 points) in three months, pushed up by short covering and institutional buying.

The benchmark index gained almost five per cent from its previous close and ended at 8,756 points. The broader Nifty shot up almost four per cent, closing at 2,719.

The rebound was largely due to short-covering in the market, said brokers. The discount between Nifty and Nifty Futures was about 17 points in the earlier half of the trading session, but short-covering led to Nifty Futures closing at a slight premium.

There were also some positives on the international front which led to a rebound in the global markets and Indian markets followed suit, said Mr Mahesh Patil, Co-Head Equity, Birla Sun Life Mutual Fund.

To some extent, the drop in the domestic inflation rate to its seven-year low of 2.43 per cent also boosted sentiment, said analysts.

But FII gross buying was higher, at more than Rs 2,000 crore. A UK-based hedge fund bought close to Rs 1,000 crore worth of equities, according to a dealer at the Emkay institutional desk. There was also heavy buying by FIIs in auto stocks, he added.

The global markets were up as the profit outlook for both JPMorgan Chase and Citigroup was good, said market men.

The European markets opened in the green as the Indian markets wound to a close. Britain’s FTSE was up by 1.74 per cent from its last close. Amongst the Asian markets, the Nikkei was up by 3.97 per cent and the Hang Seng up 4.37 per cent.

Amongst the sectoral indices on BSE, all of which ended in green, Realty was up by 7.57 per cent, Metal by 6.26 per cent, Bankex by 5.85 per cent and IT by 5.63 per cent.

Investors have started switching over from a defensive portfolio to a slightly high beta portfolio; they have sold FMCG stocks and started buying auto and capital goods stocks, Mr Amitabh Chakraborty, President (Equity), Religare Securities, said.

The market breadth was positive, with 1,583 stocks advancing and 854 stocks declining on the BSE. Twenty eight of the Sensex stocks advanced while two fell.

But fundamentally there is no major change and one would have to wait and watch to see whether this bounce back is sustainable, said Mr Patil.